Health Care Primer: An Introduction

What is ObamaCare? It is a combination of two public laws, H.R. 3590, the Patient Protection and Affordable Care Act, and H.R. 4872, the Health Care and Education Affordability Reconciliation Act of 2010. Given its complexity and reach, the recently enacted health care laws almost seem to defy summarization and comprehension.

And it is of course true that the new legislation is filled with scores of detailed prescriptions touching nearly every corner of American health care. The implications of most of these provisions will only be fully understood if and when they are made operational.

Even so, it is not necessary to describe every section and subsection of the law to understand the core and flawed logic of the broad ObamaCare project.

Fundamentally, ObamaCare is built around a small number of key changes in the way health insurance is arranged for working age Americans and their families.

Today’s employer-based system of insurance works reasonably well for the vast majority of working aage people and their families, but it leaves gaps for some because the insurance is not portable, small employers have a more difficult time securing stable options, and low-wage workers sometimes cannot afford the premiums because costs are high relative to their incomes and rising rapidly.

Instead of attacking the primary problems — lack of portable insurance owned by the policy holder and costs driven upward by excessive federal subsidization — ObamaCare leaves the flawed policies in place and attempts to coerce coverage of the remaining uninsured with a heavy-handed governmental structure. This structure is said to be targeted in a way that helps those without coverage without disrupting everything else. But that is not true. Once in place, the key ObamaCare reforms will inevitably put the federal government in the driver’s seat over the basic direction of all American health care.

Health Care Primer Categories

The Individual Mandate: For the first time, the federal government is going to impose a requirement on citizens and legal residents to purchase a product in the private economy, namely government-approved health insurance.

The Federal Regulation of Health Insurance: The government would establish what constitutes an appropriate insurance policy, and heavily regulate the premiums that can be charged. Insurers would have to take all comers without regard to their health risks.

Medicaid: Medicaid is expanded to cover everyone in households with incomes below 133 percent of the federal poverty line. The Congressional Budget Office expects this expansion will add 16 million people to Medicaid at a cost of nearly $100 billion per year by 2019.

Medicare: In order to offset the costs of ObamaCare’s two new entitlement programs, Medicare payments will be cut by over $500 billion dollars over the next 10 years. A large portion of these reductions will come from the Medicare Advantage program, which allows seniors to enroll in private health insurance plans instead of traditional Medicare. These plans which provide extra benefits with frequently no extra costs will likely be discontinued.

State-Based “Exchanges” and Premium Subsidies: States are expected to stand up new “exchanges” through which individuals and workers in smaller firms would get their insurance. Larger employers could choose to let their workers get their insurance there as well instead of through them. The federal government would subsidize the premiums of those with incomes between 133 and 400 percent of the federal poverty line.

The Employer Mandate: Employers with at least 50 employees would pay taxes if any of their workers ended up in subsidized insurance through the exchanges.

Soaring Deficits: The cost controls included in the bill are unrealistic. The pressures to expand the subsidies will be enormous, as will be the pressures to weaken the meager cost controls.

Taxes: There are new taxes on health care products and services, including drugs, medical devices and insurance policies. There are also new taxes unrelated to health care added to finance the massive new spending spree. There are new or increased income taxes, business taxes, even a tax on tanning salons.